In the exhibit below, we see another chart that we find unhelpful when looking at the path to net-zero or something close. It is not an either/or game with fossil fuels and renewables. Those promoting this idea are setting impossible goals for the renewable industries, which will keep severe upward pressure on all energy costs. Wood Mackenzie may not mean what is implied in the chart below but taken at face value it suggests that more pressure will be placed on an underfunded materials market to supply an underfunded renewable power market, in which any opportunity to use decarbonized fossil fuels will be frowned upon. It would be good to see an analysis of how much global power could be generated from decarbonized natural gas and how much pressure that would take off the renewable industries.
Source: Wood Mackenzie, May 2022
Separately, the EV chart is worth a look, as the demand for EVs is surprising to the upside, and the EV makers’ 2030 projections may be closer to the truth than some of the consultants’ projections, which of course raises the questions of where the batteries will come from. One of the stronger opinions at the conference we attended earlier this week, especially among the battery buyers was that the next 18 months look challenging, with battery demand in excess of supply, but that thereafter the balance was more favorable to the buyers – this would contradict the conclusions in the chart below. Our view, which has been fairly consistent, is that there are few barriers to entry for lithium and battery manufacture, except capital, and capital flows seem plentiful. We would be much more worried about Nickel. See today's daily report for more.
Source: The Electric, May 2022
